Financial Instruments |
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Jun. 26, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial Instruments | Financial Instruments Fair Value Measurements
Financial Instruments Recorded at Fair Value on a Recurring Basis
As of June 26, 2021, the Company had $200 million of cash equivalent in money market funds, which are classified within Level 1, and $100 million of cash equivalent in commercial paper, which are classified within Level 2. The money market funds are classified within Level 1 because they are valued using quoted prices for identical instruments in active markets. The commercial paper is classified within Level 2 as its fair value estimates were based on quoted prices for comparable instruments.
As of June 26, 2021 and December 26, 2020, the Company had $993 million and $295 million of commercial paper, respectively, included in Short-term investments on the Company’s condensed consolidated balance sheets. The commercial paper is classified within Level 2 as its fair value estimates were based on quoted prices for comparable instruments.
As of June 26, 2021 and December 26, 2020, the Company also had approximately $65 million and $46 million, respectively, of investments in mutual funds held in a Rabbi trust established for the Company’s deferred compensation plan, which were included in Other non-current assets on the Company’s condensed consolidated balance sheets. These investments are classified within Level 1 because they are valued using quoted prices for identical instruments in active markets. The Company is restricted from accessing these investments.
Financial Instruments Recorded at Fair Value on a Non-recurring Basis
During the six months ended June 26, 2021, the Company recorded in Other income (expense), net an impairment charge of $8 million associated with an equity investment.
Financial Instruments Not Recorded at Fair Value
The Company carries its financial instruments at fair value except for its long-term debt. The carrying amounts and estimated fair values of the Company’s long-term debt are as follows:
The estimated fair value of the Company’s long-term debt is based on Level 2 inputs of quoted prices for the Company’s debt and comparable instruments in inactive markets The estimated fair value of the 2.125% Notes takes into account the current value of the Company’s stock price compared to the initial conversion price of approximately $8.00 per share of common stock.
The fair value of the Company’s time deposits, accounts receivable, accounts payable and other short-term obligations approximate their carrying value based on existing terms.
Hedging Transactions and Derivative Financial Instruments
Foreign Currency Forward Contracts Designated as Accounting Hedges
The Company enters into foreign currency forward contracts to hedge its exposure to foreign currency exchange rate risk related to future forecasted transactions denominated in currencies other than the U.S. Dollar. These contracts generally mature within 18 months and are designated as accounting hedges. As of June 26, 2021 and December 26, 2020, the notional value of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges was $819 million and $501 million, respectively. The fair value of these contracts was not material as of June 26, 2021 and December 26, 2020.
Foreign Currency Forward Contracts Not Designated as Accounting Hedges
The Company also enters into foreign currency forward contracts to reduce the short-term effects of foreign currency fluctuations on certain receivables or payables denominated in currencies other than the U.S. Dollar. These forward contracts generally mature within 3 months and are not designated as accounting hedges. As of June 26, 2021 and December 26, 2020, the notional values of these outstanding contracts were $132 million and $254 million, respectively. The fair value of these contracts was not material as of June 26, 2021 and December 26, 2020.
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